GCLA Confronts Serious Legislative, Legal Challenges

Posted on May 16, 2012

LOS ANGELES — The Greater California Livery Association may be taking an annual summer break from membership meetings, but its regulatory, legislative, and legal efforts are moving full bore ahead.

Following its May 8 meeting in Los Angeles, the GCLA leadership released a series of updates for California operators, drawing upon input from its professional consultants, lobbyists and attorneys.

The regulatory and tax climate in California is being driven by a severe budget crisis, with record state deficits and calls for tax increases by the Democratic majority governing party. Caught in the lurch are small to medium sized businesses, and in particular, wealthy wage-earners who often patronize luxury chauffeured transportation companies, among other high-end services.

However, the GCLA so far appears to be steering a productive course of forestalling worst-case scenarios of harmful regulations.


A sales tax for limo service?
Responding to shortfalls in California’s proposed budget for 2012-13, Assembly Member Mike Gatto, D-Los Angeles, has introduced Assembly Bill 2540 on sales and use taxes.  The legislation would expand sales and use tax to heretofore untaxed services.  Reacting to the cry of “tax the millionaires,” Gatto suggested a sales tax on services provided, as a general rule, to millionaires; among his tax targets, limousine and charter bus services. GCLA joined a coalition of business interests to oppose Assembly Bill 2540 and the expansion of sales taxes to services.  Opposition was based on the belief that the legislation would put small businesses out of work or drive small businesses underground, hurt working families, create costly and extensive administration problems, and worsen California’s business climate. These arguments resonated with legislators and in April the bill was pulled from the agenda of a Assembly Revenue and Taxation Committee hearing. The opposition coalition had succeeded.  

Labor standards: Laws, regulations and enforcement
Responding to pleas from small business operators, Sen. Sam Blakeslee, R-San Luis Obispo, introduced Senate Bill 1333 that would assist small business operators in obtaining information regarding labor law regulations and enforcement.  Blakeslee’s legislation would establish a “labor standards consultation unit.”  Small business operators who may not readily have access to legal assistance would be able to contact the consultation unit to gain advice and counsel on California’s labor laws and regulations. The GCLA is supporting this legislation.  Sen. Roderick Wright introduced Senate Bill 1099 reacting to concerns that state regulations are constantly changing and small business has little knowledge to those changes until some enforcement officer sends a notice of violation.  Wright’s legislation would require the California Office of Administrative Law to make available, a no charge, the full text of the California Code of Regulations on its web-site, resulting in another hoped for solution for small business operators.

Reaction to a tragedy
In the summer of 2010, a young man, after participating in an evening of riding around the San Francisco Bay Area with friends and too much alcohol in a charter bus, departed the bus and drove his car into a tree with a tragic loss of life.  His horrified parents wanted a state law that would prevent this from ever happening again.  The result: Assembly Member Jerry Hill, D-San Mateo, introduced Assembly Bill 45 that would have dramatically affected the presence of alcohol in charter vehicles. The GCLA has been deeply engaged in negotiations with the Assemblyman and his staff. Hill visited Gateway Limousines in Burlingame to learn more about the limousine industry and the controls in place to protect minors. Today, the legislation appropriately places the responsibility for monitoring the availability and consumption of alcohol by a minor on the contracting party or his or her designee, not on the vehicle chauffeur or operator.  The close working relationship with Hill has helped facilitate and agreement to amend Assembly Bill 45 that adds to current law the authorized use of electronic waybills in place of traditional paper, hard copy waybills. The GCLA is actively supporting Assembly Bill 45.

In its summary, GCLA lobbyists wrote: “The vast majority of legislative proposals are a direct reaction to an issue of importance to legislators. Some of those reactions make sense and others, quite frankly don’t. GCLA legislative advocates monitor all bills introduced in the California Legislature and engage in those that have a direct impact on the limousine industry and limousine operators and employees. The GCLA legislative committee and the GCLA executive board make the determination of what direction our legislative activities should take and define the outcomes desired.”


Meal and rest periods decisions
On the legal front, the California Supreme Court finally issued its decision in Brinker v. Superior Court in April which clarified employers’ obligations in providing meal and rest periods to employees.

The court held that while employers must provide uninterrupted 30-minute, off-duty meal periods to employees, they need not ensure that such meal periods are actually taken.  Thus, while livery companies must permit employees to take a meal break by relieving them of all duty, there is no obligation to police their meal breaks to make sure they are actually being taken. Additionally, if an employee, on his or her own volition and without any pressure from the employer, chooses to work through a meal period that has been made available or to take a late meal period, he or she is not entitled to any premium pay.  Employees must be provided with a first meal period before the end of their fifth hour of work, and a second meal period before the end of their tenth hour of work.

The court held that employees are entitled to a rest break of at least 10 minutes for every four hours worked, or a “major fraction thereof” (i.e., over two hours); no rest break is required for an employee whose total daily work time is less than three and one-half hours. Unlike the court’s simple guidelines for the timing of meal periods, the guidelines for when employees are entitled to take rest periods are highly technical. The court held that employees are entitled to one 10-minute rest break for shifts from three and one-half to six hours in length; a second 10-minute rest break for shifts more than six hours up to ten hours; and a third 10-minute rest break for shifts of more than ten hours up to fourteen hours.  Finally, the court held that although rest breaks should be taken in the middle of work periods “so far as practicable,” employers “may deviate from that preferred course where practical considerations render it infeasible.”

For advice and a detailed tipsheet on how limousine operators can best abide by this court decision, California operators should contact: Mark Stewart, President, Greater California Livery Association (GCLA), 8726 S. Sepulveda Blvd. #2317, Los Angeles, CA, 90045, (866) 392-4252 or direct line, (714) 546-6737, [email protected]

The Wage Theft Protection Act Notice
The same day that Brinker was decided, somewhat overlooked, but also important, the Department of Labor Standards Enforcement (DLSE) revised the mandatory wage notice for non-exempt employees, “Notice to Employee.” In its revision, the DLSE modified several sections of the notice template and updated the FAQs for a second time this year.

On January 1, 2012, the Wage Theft Prevention Act (codified in Section 2810.5 of the Labor Code), imposed a requirement on employers to provide non-exempt employees notice of specific wage information at the time of hire. The DLSE provided a template of the notice and FAQs concerning its usage were posted on its website. Shortly thereafter, the DLSE issued an update to its FAQs in response to numerous questions raised by employers. Proving insufficient, the DLSE issued a second update on April 14, 2012 to its FAQs and again revised the notice template.

The takeaways from the revised FAQs and notice:

  • Acknowledgement of Receipt section is optional.
  • The notice must be provided before the employee’s start date.
  • The notice no longer indicates designation of the employment agreement as “written” or “oral.”
  • The notice does, however, require designation of whether a written agreement exists which provides for the employees’ rate(s) of pay.  (This has no legal effect on the “at will” nature of the employment relationship.)
  • The notice must contain the employer’s full formal legal name, including the entity designation and any “doing business as” names.
  • The notice requires additional information if the hiring employer is a staffing agency or business.
  • Most importantly, while employers need not reissue the notice to current employees, absent a substantive change to the information, employers must use the new version of the notice for new hires going forward.  

As demonstrated by the DLSE’s frequent clarifications and changes to the notice, future modifications to the notice are likely. Employers, therefore, are well-advised to stay informed and up-to-date on the evolving employment law landscape, particularly in this area.

Willful misclassification of employees as independent contractors
Just this year, Labor Code section 226.8 was added to the Labor Code to expressly prohibit the “willful misclassification” of employees as independent contractors. It prohibits employers from charging an individual who has been willfully misclassified any fee (or from making any deductions from compensation) for any purpose, including for goods, materials or space rental, which the employer could not have lawfully made if the individual had not been misclassified. “’Willful misclassification’ means avoiding employee status for an individual by voluntarily and knowingly misclassifying that individual as an independent contractor.”

This law has been given significant enforcement mechanisms through the Labor and Workforce Development Agency, which, along with traditional judicial authority, can award civil penalties ranging from $5,000 to $15,000 per violation of the law. Moreover, if the agency or judicial authority determines that the misclassification was part of a “pattern and practice,” the penalties can increase to $10,000 to $25,000 per violation. And, as though that were not sufficient, the Labor and Workforce Development Agency or court “shall” also order the employer to display prominently for one year on its website or in an area generally accessible to all employees or the public, a notice signed by an officer of the employer containing specifically-enumerated information about the violation, including the violation has occurred, that the employer has changed its business practice, how employees may contact the Labor and Workforce Development Agency, and that the notice is posted pursuant to state order.

Sources: GCLA’s lobbying firm; GCLA’s law firm; Martin Romjue, LCT editor

Related Topics: accidents, California operators, Greater California Livery Association, labor laws, limo buses, managing chauffeurs, sales taxes, state regulations, wage lawsuits

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